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FTC Investigating F2P?

Richard Aihoshi Posted:
Columns The Free Zone 0

"Well, it's about time the government did something to stop free to play companies misleading everyone." 

"I always knew it was a questionable form of marketing."

"It's dishonest.  F2P should have been illegal from the beginning."

Okay, I'm exaggerating a little.  But only a little.  Since almost a week ago, there has been a burst of negativity in which people have taken issue with the F2P business model.  This has happened on the heels of a report published by the Washington Post.  The online version - I have no reason to assume the paper and ink one was any different - is dated last Tuesday and carries the headline "FTC to review Apple iPhone in-app purchases". It seems numerous game and consumer publications took note and offered up their own stories, none of which, at least in my admittedly less than exhaustive search, contained any new hard information.

The Post piece follows another "In-app purchases in iPad, iPhone, iPod kids' games touch off parental firestorm", that apparently appeared on its front page on Feb. 8.  Must have been a pretty slow news day.  In any case, it leads of by telling us that an 8-year-old spent $1,400 to personalize her mushroom home in an iPhone game, Smurfs' Village.  There are two other examples of kids using their parents' money to buy virtual goods in other titles.  Both involve far smaller amounts, $150 in Tap Zoo and $52 in Dolphin Play. 

For what it's worth, the Metro columnist for the Post offered his opinion, also on Feb. 8 - "Parents mad at Apple's in-app game charges? They have only themselves to blame".

Getting back to the second article, the only thing I've seen from the FTC is part of a letter that its head wrote in response to an inquiry by member of Congress.  As reported in the Post article last week, it says "'We fully share your concern that consumers, particularly children, are unlikely to understand the ramifications of these types of purchases,'" Leibowitz wrote. "'Let me assure you we will look closely at the current industry practice with respect to the marketing and delivery of these types of applications.'"

What I don't understand is how this got blown up into an impending investigation of the entire US F2P space.  The first sentence in last Tuesday's Post piece states that "The Federal Trade Commission said Tuesday it will review the marketing and delivery of mobile applications that charge users for products and services, such as through Apple's iTunes store."

So, if we only look at the FTC honcho's two sentences, it's possible to think an investigation of some sort will ensue.  However, there's no indication of how small or large, formal or informal, etc. it will be.  But based on what the Post said right up front, the scope - al least currently - is limited to mobile. 

Maybe a much broader investigation is what will take place.  Perhaps there are reasons for one.  I fully agree that marketing to kids has to be incorporate reasonable safeguards.  But frankly, a couple of things about this situation rub me the wrong way.  One is that if the problem is large and widespread enough to warrant the recent amount of press, i.e. if a lot of kids have been spending their parents' money in F2P games, why did it only become visible in the last few days?  Is it possible that the politicians asking into the matter might feel doing so could improve their images with their constituents?

The other is that the government has been very slow to take action elsewhere in the quasi-F2P space.  I refer to online poker, where it's possible - and not all that unusual - to amass thousands of dollars without ever putting a cent at risk.  There's are many more cases of seeming abuse by apparently unscrupulous operators who, for example, went out of business without returning the players' money.  What's more, quite a number of reports I've seen have involved far more than $1500.

To me, this situation screams out for government regulation.  But it doesn't come with nearly the political currency of protecting kids.  Poker players are mostly adults, and the defenders of the moral right wing think it should be outlawed entirely, not regulated.  I guess they never heard how well prohibition worked.

And in case you're wondering if it affects the perspective behind my opinions, I'm not a parent.  I do play poker online, and have lost money when sites ceased operating, sometimes with little advance notice, although not any significant amounts since I've always taken at least some care not to leave meaningful sums anywhere.


Richard Aihoshi

Richard Aihoshi / Richard Aihoshi has been writing about the MMOG industry since the mid-1990s, always with a global perspective. He has observed the emergence and growth of the free to play business model from its early days in both hemispheres.